Kforce, Inc. · NYSE:KFRC
Kforce — JP Morgan Ultimate Services Investor Conference 2013
24 slides from Kforce's conference presentation, Nov 13, 2013
Slide 1: Kforce
IKKFORCE KFORCE Great People = Great Results*
Slide 2: Forward Looking Statements
Forward Looking Statements All of the information presented that is not historical in nature should be considered to be forward-looking statements that are subject to certain risks, uncertainties or assumptions and may be affected by certain other factors, including but not limited to the specific f
Slide 3: Kforce at a Glance
Kforce at a Glance Company overview Kforce is a professional staffing solutions firm providing flexible and permanent staffing services to clients in an array of industries 50 year operating history – public since August 1995 Q3 ‘13 Revenue: $299.7 Million 2012 Revenue: $1.1 Billion Market C
Slide 4: Diversified Revenue Stream Q3 2013 Revenue
Diversified Revenue Stream Q3 2013 Revenue – $299.7M HIM Government 7% 8% Finance & Accounting 21% Tech 64% 4
Slide 5: Key Investment Highlights
Key Investment Highlights • Large, attractive end market with positive recent trends • Tech staffing spend projected at $26 billion in 2013 • Strong demand for higher skill sets in a temp led recovery • Positive long-term secular trends as employers seek a flexible human capital solution against reg
Slide 6: Seasoned Management Team
Seasoned Management Team David Dunkel • 33 years industry tenure Joseph Liberatore • 25 years industry tenure Chairman & CEO President David Kelly • 14 years industry tenure Kye Mitchell • 23 years industry tenure Chief Financial Officer Chief Operations Officer, East Jeffrey Neal • 20 years industr
Slide 7: Large End-markets with Significant Growth Opportunities
Large End-markets with Significant Growth Opportunities Technology Finance & Accounting IT staffing sector is expected to grow due to multiple demand F&A staffing sector is expected to grow due to multiple demand drivers: drivers: − Rapid pace of technological change − Lack of skilled finance an
Slide 8: Secular and Cyclical Staffing Growth Drivers
Secular and Cyclical Staffing Growth Drivers As buyers/clients become more sophisticated in managing their workforce, companies are structurally utilizing temporary labor as a larger percentage of their workforce − Temporary penetration rates approaching historical peak levels of 2.03% and well be
Slide 9: Temp Penetration Rate At Cycle Peak
Temp Penetration Rate At Cycle Peak 9
Slide 10: Technology
Technology 64% of Q3 ‘13 revenue Key Trends: Obsolescence, deferred maintenance and upgrades are driving current spending $26 billion domestic market for Tech staffing projected in 2013 HIM Government 7% 8% Key Statistics: Finance & Accounting Average bill rate: ~$66.00 21% Assignment length
Slide 11: Finance and Accounting
Finance and Accounting 21% of Q3 ‘13 revenue Key Trends: Skilled F&A professionals Projects related to M&A, tax, systems conversions, work-outs, transaction processing HIM Government 7% 8% Key Statistics: Finance & Accounting Average bill rate: ~$32.00 21% Assignment length: approximately 3
Slide 12: H.I.M.
H.I.M. 7% of Q3 ‘13 revenue Key Trends: Aging population and skill shortage Healthcare reform mandates rapid migration to electronic medical records HIM 7% Government ICD-10 mandated implementation 8% Key Statistics: Finance & Accounting 21% Average bill rate: ~$61.00 FTE’s: 700 Tech 64% 1
Slide 13: Government
Government 8% of Q3 ‘13 revenue Key Trends: Government provides clients with integrated solutions across the finance and accounting and technology disciplines Long-term contract profile HIM Government Key Statistics: 7% 8% FTE’s: 600 Finance & Accounting Defense / civilian split: 54/46 21%
Slide 14: Financial Overview
Financial Overview KFORCE
Slide 15: Strong Financial Model
Strong Financial Model Revenue growth acceleration Improving margin profile Significant headcount additions since Q4-12. Streamlining actions to drive lower Ongoing headcount additions to take SG&A levels advantage of market opportunity Attractive gross margins Diversified high end market
Slide 16: Sequential and YOY Revenue Growth
Sequential and YOY Revenue Growth Total Firm Tech Flex FA Flex 15.0% 15.0% 15.0% 10.0% 10.0% 10.0% 5.0% 5.0% 5.0% 0.0% 0.0% 0.0% -5.0% -5.0% -5.0% -10.0% -10.0% -10.0% Q1 13 Q2 13 Q3 13 Q1 13 Q2 13 Q3 13 Q1 13 Q2 13 Q3 13 HIM Flex Govt 15.0% 15.0% 10.0% 10.0% 5.0% 5.0% 0.0% 0.0% -5.0% -5.0% -10.0% -
Slide 17: Income Statement – Year over Year
Income Statement – Year over Year Three Months Ended (000's) Sep. 30, Sep. 30, Increase / 2013 2012 (Decrease) Flex Revenue 287,408 257,790 11.5% Search Revenue 12,244 12,371 -1.0% Total Revenue $ 299,652 $ 270,161 10.9% GP % 32.5% 32.9% -40 bps Flex GP% 29.6% 29.6% +0 bps SG&A % 26.5% 26.0% +50 bps
Slide 18: Income Statement – Sequential
Income Statement – Sequential Three Months Ended (000's) Sep. 30, Jun. 30, Increase / 2013 2013 (Decrease) Flex Revenue 287,408 270,385 6.3% Search Revenue 12,244 13,304 -8.0% Total Revenue $ 299,652 $ 283,689 5.6% GP % 32.5% 32.7% -20 bps Flex GP% 29.6% 29.4% +20 bps SG&A % 26.5% 27.7% -120 bps Ope
Slide 19: Staffing Revenue and Performer Headcount
Staffing Revenue and Performer Headcount 30.0% 23.2% 21.2% 21.0% 17.8% 20.0% 13.2% 9.2% 10.0% 11.3% 10.0% 4.4% 4.1% 0.0% 3.1% -1.0% -10.0% Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13E YOY Staffing Revenue Growth % YOY Revenue Responsible Headcount Growth % 19
Slide 20: Realignment Assumptions
Realignment Assumptions Q4-13 Realignment Charge = $6 to $7 million 2014 Normalized Quarterly EPS Benefit of $0.03 to $0.05 20
Slide 21: Future State Operating Margin
Future State Operating Margin Q4-13 Operating Income 5.3% Gross Margin Expansion + 0% Cost Realignment + 1.0% Associate Productivity and Scale + 1.2% Exceeding Prior Peak Operating Income 7.5 % 7.5% Operating Income implies quarterly revenue of $350m to $400m 21
Slide 22: EBITDA per Share
EBITDA per Share Prior Peak Actual Prior Peak Operating Q3'07 Q3'13 Margins Exceeded Operating Margins 7.4% 5.2% 7.5% EBITDA (000's) $ 24,033 $ 18,339 $29,000 - $33,000 Shares (000's) 42,544 33,130 33,100 EBITDA per Share $ 0.56 $ 0.55 $0.88 - $1.00 22
Slide 23: Balance Sheet / Cash Flow
Balance Sheet / Cash Flow (Millions) Sep Jun Sep 2013 2013 2012 Working Capital $102.6 $94.6 $98.2 AR Gross Balance $184.0 $167.0 $171.6 AR Over 60% 3.3% 3.8% 4.0% Bank Debt $53.4 $50.1 $0.0 Debt/Equity Ratio 34.2% 32.8% 1.0% EBITDA $18.3 $14.8 $18.4 23
Slide 24: Summary
Summary Professional domestic staffing sector experiencing strong secular and cyclical growth drivers Kforce well positioned in critical in demand skill sets, particularly Tech Flex Continued investment in revenue responsible headcount Recent significant actions taken to streamline business
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